[Slybone]

Please note, this is a FINANCE question, so it should be answered using the principles of finance and not accounting :). My question reads as follows. I will attempt to work my way through it, skipping what I do not understand in hopes of assistance :).

Aztec Printing Inc had sales totaling $40,000,000 in fiscal year 2009. Some ratios for the company are listed below. Use this information to determine the dollar values of various income statement and balance sheet accounts as asked for.

Sales - $40,000,000
Gross Profit Margin - 80%
Operating Profit Margin - 35%
Net Profit Margin - 8%
Return on Total Assets - 16%
Return on Common Equity - 20%
Total Asset Turnover - 2
Average collection period - 62.2 Days


Calculate values for the following in the space privided. You must begin with the appropriate forumla, show all computations and properly designate ($, %, etc.. )

a. Gross Profits
Sales ($40,000,000) x Gross Profit Margin (80%) = 32,000,000

b. Cost of goods sold
SALES - COST OF GOODS SOLD = GROSS PROFITS
40,000,000 - x = 32,000,000
Gross Profit = 8,000,000

c. Operating Profits.
Operating Profit Margin (35%) x Gross Profits (32,000,000)
Op. Profit = 11,200,000

d. Operating expenses
GROSS PROFITS - OPERATING EXPENSES = OPERATING PROFITS
32,000,000 - x = 11,200,000
Op. Exp. = 20,800,000

e. Earnings available for common stockholders
OPERATING PROFIT ($11,200,000)- NET PROFIT AFTER TAX (8% or 896,000) = EARNINGS AVAILABLE FOR COMMON
$11,200,000-$896,000=$10,304,000
-


***I AM STUCK BELOW THIS***


f. Total assets

g. Total common stock equity

h. Accounts receivable
Average Collection Period = Accounts receivable / (Netsales /365)

So Given
62.2 = x / (40,000,000 / 365)
62.2 = x / 109589
62.2 x 109589
ACCOUNTS RECEIVABLE = 6,816,435.8




***
Please let me know if the above looks correct, and if you could assist me with solving f g and h

[ArcSine]

You're good on (a) and (b).

For (c), take note that "operating profit margin" almost always refers to operating profit as a percentage of Sales, rather than of Gross Profit. Re-work (c) to determing Operating Profit.

Re-compute your Operating Expenses in (d), based on your revision for (c).

As with operating profit margin, "net profit margin" refers to net profit as a percentage of Sales. Thus, the earnings to common (for (e)) is 8% of Sales.

You can get to Total Assets in (f) a couple of ways. The asset turnover ratio is Sales / Assets, which you're told is 2. Or, the Return On Assets metric is computed by , and you're given that one as 16%. Either way you'll hit the same result for Total Assets--in fact, do 'em both for insurance.

Total common equity for (g) is derived from the Return On Equity metric: . With the 20% ROE that you've been furnished, you can solve for Equity.

Your AR calc in (h) is fine.

[Slybone]

a. Gross Profits
Sales ($40,000,000) x Gross Profit Margin (80%) = 32,000,000

b. Cost of goods sold
SALES - COST OF GOODS SOLD = GROSS PROFITS
40,000,000 - x = 32,000,000
x = 8,000,000

c. Operating Profits.
Operating Profit Margin (35%) x Sales ($40,000,000)
= 14,000,000

d. Operating expenses
GROSS PROFITS – OPERATING EXPENSES(x) = OPERATING PROFITS
32,000,000 –x = 14,000,000
x=18,000,000

e. Sales x Net profit Margin
40,000,000 x .08 = 3,200,000

f.
g.

h. 62.2 = x / (40,000,000 / 365)
62.2 = x / 109589
62.2 x 109589
ACCOUNTS RECEIVABLE = 6,816,435.8

Above is what I have now..
and below are the two I was having difficulty with
If Total asset turnover = Net Sales / Total Assets then I have
2 = 40,000,000 / x
then x 20,000,000?

and for g...
(ROE) .20 = (NET PROFIT) 3,200,000 / x (common stock equity)
x = 16000000

[ArcSine]

Ya got it.